Refund fraud committed by prisoners remains a significant problem
for tax administration. The number of fraudulent tax returns filed by
prisoners and identified by the IRS has increased from
more than 18,000 tax returns in Calendar Year 2004 to more than 91,000 tax
returns in Calendar Year 2010. The refunds claimed on these tax returns increased
from $68 million to $757 million. Although the IRS prevented the issuance of $722 million
in fraudulent tax refunds during Calendar Year 2010, it released more than $35 million. Figure 1 shows the number of fraudulent tax returns identified by the IRS as filed
by prisoners in Calendar Years 2004 through 2010 and the related refund
information.